Chargebacks can put a major kink in your retail store’s cash flow, especially if you’re in a high-risk industry. They happen when a customer disputes a charge on his or her credit card, which means that the money goes back to the customer and you’re left with a hole in your balance sheet.
Some chargebacks prove to be valid, while others occur because customers try to game the system. If you want to avoid chargebacks, implement these four security solutions for your retail business.
Create Customer Service Protocols
Poor communication can lead to chargebacks if customers feel that you’re not listening to their concerns. From reading and replying to online reviews to calling back customers who leave voicemail messages, you can resolve many disputes with simple courtesy.
Develop customer service standards that address as many potential issues as possible, including the following:
- Damaged merchandise
- Merchandise with missing parts or pieces
- Undelivered merchandise
- Billing disputes
Write down your customer service protocols and distribute them to every employee. Monitor employee communications with customers to make sure that everyone follows the rules.
Recognize Fraud Red Flags
Many chargebacks occur because of fraud. Someone skims a consumer’s credit card or steals it outright. Although you can’t always prevent fraud, you can look for common red flags:
- Mismatched billing and shipping addresses
- Orders from countries with which you’ve never done business
- Absent CVV, or card verification value
- Several card-not-present transactions in a short time frame
If you suspect fraud, you can reach out to the customer to inquire about the transaction. Alternatively, get in touch with the credit card company so that it can verify the purchase through the cardholder.
Sometimes fraud slips through the cracks. However, if you’re able to limit fraudulent card transactions, you can reduce chargebacks and improve cash flow.
Dispute the Chargeback
If you feel that a customer has requested a chargeback in error, don’t just accept defeat. Instead, fight the chargeback with evidence that you’ve done nothing wrong.
You’ll experience more success if you implement policies in advance. For instance, make sure every customer signs a contract that details your refund and cancellation policies. The better you prepare your business for potential chargebacks, the less vulnerable you become.
Create a Recognizable Billing Descriptor
Some chargebacks happen because a customer doesn’t recognize a charge on his or her credit card statement. To prevent this problem, use your company name as your payment or billing descriptor. For instance, you might have a doing-business-as, or DBA, name that’s different from your LLC or incorporation. Use the DBA so the customer knows where the charge originated.
This becomes particularly important with high-risk credit card processing. Because you’re already vulnerable to chargebacks, you’ll want to protect your business against misunderstandings. Even if you can reverse a chargeback, you’ll save time and money through prevention.
Chargebacks frustrate many retailers, especially in the high-risk category, but you don’t have to suffer silently. Instead, use a trusted merchant account provider and insulate your business against fraudulent and erroneous chargebacks.